CEO of Ozempic, Calibrate’s prescription startup, steps down as investors rapidly shrink the size of its consumer business

Calibrates founder and CEO Isabelle Kenyon is stepping down as CEO and will no longer oversee day-to-day operations. Carsten Snejbjerg Bloomberg/Getty Images; Calibrate

Calibrate, the weight loss startup backed by Founders Fund and Tiger Global, is making changes to its management team as investors restructure the company, according to an investor letter, internal correspondence seen by Fortuneand another person familiar with the changes.

Calibates founder and CEO Isabelle Kenyon is stepping down as CEO and will no longer oversee day-to-day operations, she confirmed in a Slack message sent to employees Monday afternoon that was seen by employees Fortune. In the note, she stated that she would remain with the company as founder. Calibrate Chief Financial Officer Dave Fielding will also step down, according to a person familiar with the matter. This person claims that talks are ongoing with potential successors to both roles. Calibrate executives Scott Honken and Ed Cudahy have been promoted to roles overseeing day-to-day operations and will report directly to the board, according to a Kenyons Slack news release.

It is unclear whether the plans are final or when the company plans to officially implement them. When you get to Fortune, Calibrate Chief Financial Officer Dave Fielding said he still works at the company and declined to comment further.

Redesign Health, the startup studio that initially launched Calibrate in 2019 and which sent a letter to its investors that was reached FortuneAccording to the letter, it will play an active role in facilitating the restructuring. The same will happen with Madryn Asset Management, an alternative asset management company that lent most of its funds to Calibrate this year.

“We continue to be very confident in the direction of the business, especially given the financial support Madryn is providing to the company to put the company on a path to profitability,” a spokeswoman for Redesign Health said in a statement, noting that Redesign will provide daily support for Calibrates operational, financial and planning efforts .

Calibration launched in 2019 to help patients achieve weight loss. The company prescribes GLP-1 drugs typically used to treat type 2 diabetes, such as the popular weight loss drug Ozempic, to patients via telemedicine. The platform also offers video coaching for patients on topics such as nutrition, exercise, sleep and emotional health. As demand for Ozempic grew, Calibrate raised over $160 million in capital from venture capital firms including Founders Fund and Tiger Global. Calibrate has entered into a partnership with an employer to provide metabolic health services.

However, this year the company ran into trouble. The letter said Calibrate had to refund subscription fees to many patients due to drug shortages and the company was unable to obtain equity financing. Insider reported that the company fired about 250 people over two rounds of layoffs. To make matters worse, the letter shows that acquisition talks this summer between Calibrate and a major health care industry leader fell through. (Redesign stated in the letter that it believed a future transaction between one company or another was still possible)

Calibrates investors are stepping in to make management changes, begin rapidly scaling back Calibrates’ direct-to-consumer operations and bring the company to profitability, according to the investor letter. According to the letter, as part of the restructuring, Madryn Asset Management and other investors will inject another $20 million in cash into the company to make changes necessary to ensure its profitability.

Redesign told some investors in its first venture capital fund that it had reduced the value of its Calibrate investment to 1x.

As the letter states, an attractive outcome has become less likely.